In a transaction symbolic of the upswing of an entire asset class, ESJ Capital Partners has closed on the $71.74 million sale of five Florida charter schools to buyer Charter School Capital based in Portland, Oregon.
Colliers International Education Services Group represented seller ESJ Capital Partners and its minority partner, MG3 Development Group. ESJ Group is a full-service asset management firm based in Aventura, FL and Luxembourg, Europe. With a current investment portfolio in excess of $635 million, ESJ has been involved in over 30 charter schools as the principal lead investor.
The portfolio is comprised of five charter schools totaling 295,992 square feet, situated on 40 acres across various sites in Florida, including: Riverview, Vero Beach, Coral Springs, Davie and Plantation. Unique to this nature of charter schools was the fact that the portfolio also represented five individual operators, or Charter School Management Organizations (CMOs), versus one operator or tenant. The average remaining charter term for the portfolio is 17 years. Part of the Colliers team’s successful strategy required educating prospective buyers on each individual CMO and nuances of each charter school, considered a special-purpose building.
“Charter schools have historically sold individually, not in a portfolio,” noted Colliers Senior Vice President and Education Services Group Member Achikam Yogev. “So while the buyer was naturally very interested in a strong footprint of high-performing charter schools with a diversified roster of CMOs, it also required a much more thorough approach to due diligence and expertise in this highly-specialized asset class.”
Case in point: Buyer Charter School Capital, with an established nationwide presence, was procured after less than one month of marketing. The due diligence prior to close, however, took several months as each school was inspected and its charter reviewed. As the portfolio came close to closing, Hurricane Matthew forced the West coast buyer to reinspect each school property.
Comprised of veteran real estate professionals with specific education facilities experience, the Colliers International Education Services Group has a robust platform of specialized advisors in major US markets to advise owners and occupiers of educational based real estate. Todd Noel, Executive Vice President and National Director of the Education Services Group based out of Phoenix, worked closely with Miami-based Achikam Yogev on the intricacies of the deal.
“Everything about this asset class is specialized – the actual properties, the risks and rewards, the parties involved” said Todd Noel. “It took a seasoned, collaborative team to put the deal together.”
Charter schools, which are tuition-free public schools created through a “contract”or “charter” between the school and the local district school board, have enjoyed rising popularity in the state of Florida since their inception in 1996. The agreement provides the charter school a margin for expanded freedom relative to conventional public schools in exchange for a commitment to higher standards of accountability. These expanded freedoms can include themed learning-approaches with a focus on arts, sciences and technologies or tailored services to specific student populations.
According to the Florida Department of Education, the number of charter schools rose to 652 during the previous school year, with more than 270,000 students enrolled across Florida, representing an enrollment surge of more than a 50% during a five-year timeframe. Generally characterized as a friendly environment to charter schools, the momentum of this concept across Florida is expected to continue as parents seek additional public education options to provide competitive and innovative learning opportunities.
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